In 2023, the Consumer Financial Protection Bureau (CFPB) proposed a rule to remove medical debt under $500 from consumer credit reports, and the three major credit reporting agencies voluntarily agreed to stop reporting this debt. Now, a new rule from the CFPB will remove all medical debt from consumer credit reports. This change will take effect on March 17, 2025.
While individuals with medical debt will still be responsible for paying what they owe, unpaid medical bills will no longer weigh down consumers’ credit scores. This is good news for patients, but some healthcare providers are concerned about the potential impact on revenue cycle management (RCM).
How will this impact healthcare providers, and what can you do to prepare for any potential effects?
If medical debt no longer impacts patients’ credit scores, providers worry some patients will be less likely to make timely payments. Such a shift could result in longer accounts receivable cycles and reduced cash flow. Chasing down payments requires additional time and effort, increasing the administrative burden on office staff.
To mitigate these potential impacts, healthcare providers should be proactive, communicative, and flexible. Being proactive will help providers secure more payments before they enter the billing cycle, and being communicative and flexible will improve the patient experience and empower them to make convenient, timely payments.
How does this impact patients and their access to healthcare?
Removing medical debt from credit reports affects patients differently, depending on their credit score and financial circumstances. According to the CFPB, Americans with medical debt on their credit reports should see their credit scores improve by around 20 points when that debt is omitted from credit reporting.
A higher credit score means increased access to loans, credit cards, and even housing. In many cases, it also means greater access to financing options that make healthcare more affordable and accessible, such as medical credit cards and payment plans. With less fear and stress surrounding medical costs, patients may seek necessary or elective care without worrying about future credit health.
Modern revenue solutions can help
Erasing medical debt from credit reports is a win for patients, and it can be positive for providers, too. If providers proactively explain and offer options to collect out-of-pocket costs, patients are more likely to fulfill their financial responsibility.
To capture more payments upfront and avoid chasing down unpaid bills, providers can offer a modernized patient payment experience. These features make the payment process easier and more seamless for providers and patients alike:
- Card on file: Securely store patient card information on file for future payments, streamlining the checkout process and preventing non-payment.
- Recurring payments: Create flexible payment arrangements for patients, meeting their financial needs while steadily reducing their unpaid balance.
- Text-to-Pay: Send individual or bulk text messages to collect co-pays and outstanding balances. With Bridge™ Payments, patients can quickly pay online via a link in the message.
- Patient financing: Increase case acceptance by offering various payment plans for patients who might struggle to pay larger balances.
- Online payments: Collect payments 24/7 with online credit card processing.
Finding better ways to pay and get paid
While erasing medical debt from credit reports is good news for consumers, it can pose a revenue management challenge for healthcare providers. That is why it’s imperative to have a variety of tools in your revenue management toolbox.
Solutions like Rectangle Health’s Practice Management Bridge® offer convenient, patient-friendly features that simplify the payment process and reduce the need for manual follow-ups. We are industry leaders who have helped providers get paid in full for over three decades. To learn how we can help secure more patient payments upfront and hedge against unpaid medical debt, request a demo today.
